Your Opinions on Price Points?

Very good post. Your point about charging $7.95 instead of $5 makes a lot of sense.

As for your question for the price point of $37 to $47...As I think about it right now, I don't think I would not pay $47 if I were willing to pay $47. I mentally see the next price f point for me from $37 to be $50.

As you already know...That only a $3 difference for $47, but that really does not matter to the consumer. It's all mental.

There are few things I consider before takin out my card (as a customer)
1- How much value I am going to get from th product / offer. And sometimes the value is not just tangible but emotional too.
2- If I can get the same or similar product somewhere else, I'l compare th price and features.
3- The feedback of the seller.
4- If its somethin which requires after sales service then I check for th feedback for th same.
5- How much that thing is urgent for me as time is sometimes more valuable than money.

As a marketer (Few points will repeat) I mainly consider below points.
1- How much value my product can provide in people's life and ofcourse, value can be emotional as well
2- How much the product has cost me to made and what is my profit margin
3- If the cost is not much then what time it has taken me to make.
4- The competition.
5- Moreover, I can start with the conservativ price and set an increasin rate after nuber of products sold.

Typically, I believe you get what you pay for. I don't know if I've ever purchased a $5-10 product that wasn't a service on fiverr or book on Amazon. I've also been around long enough to know that behind (almost) every $7 product is a one time offer and/or upsell.

Most of what I buy falls within the $25-100 range. After that, I start doing more research on what the product has done for others more so than what the market claims it will do. These generally aren't MMO products like systems or ebooks but usually software or plug ins that makes my business more efficient and easier to manage.

There are however times where I can't find any difference in $37, $47, or even $97 products. The most recent example is a social sharing plugin I was looking for.

To me it all depends on the seller. There is someone here that puts out some really good amazon associate products that I would pay $37.00 to $47.00, but only because I am familiar with her products and I know they are worth it.

On the other hand, I have purchased some email marketing products form another member here. And while they are informative and actionable I do not find them to be worth more than $10.00

And, if I have never heard of a product creator or they do not have a verifiable history in this market then I probably would not pay much for the first product I purchased from them.

al

Nah, in my Mind it is so negligible the two prices wouldn't matter. To me if it is worth $37 to open up my wallet, another $10 is no big deal.

Of course for the Seller it could be HUGE ! And thus worth considering the $47 price point

- Robert Andrew

Well, for me the proof is in the pudding with my own product sales.

People who would pay $37 would pay $57 and eventually $87.

Value based on price perception is another factor. I had an offer that wouldn't sell at $97 or $197, but blew up and sold for years at $297.

I'm in complete agreement, based on my own experience, about the "If they'll pay $5 they'll pay $7" idea.

However, there are indeed invisible price points, because I have run up against them. Particularly around the $97 - $127 zone. Buyers will believe $77 or $87 "isn't that much," but $97 suddenly is and $117 sure as heck is for some reason.

But once you get past that price point, nothing seems to matter until you get to the $187 level. Then people start paying attention again.

Note that this is purely for low ticket sales.

High ticket sales are another ballgame entirely and price becomes a completely different thing.

Kurt

I have never been one to worry about price points , I have sold e-books $27 and made a lot of money , so I think there is this IMHO stupid idea that less is best like the crappy WSOs that sold for $7 and that became the new norm

If you think that you have a price go for it , my equation was 3 weeks one e-book $27K it can be done.

Jason

Am I correct in understanding that this question isn't really about price points, but about psychological pricing? They're related, but not necessarily the same thing.

Assuming that I am, first a disclaimer:
We don't make a lot of our own products -- and we never make or sell "information products", which is what I think you're really asking about.

That aside, here are a few observations:

1. I think much of what passes for "best practices" in pricing (at least on the WF) is based on nothing but unsubstantiated opinion based on others' unsubstantiated opinions. A lot of research has been done on psychological pricing -- but most of it is inconclusive. Regardless, I doubt that most people around here are aware that this research even exists, let alone have actually read any of it. They price their information products for $7 because that's what they were told to price them at by someone who was also told to do that by someone else who really didn't know anything either.
   
   
2. To me there are a lot of layers that go into pricing. Camohit put together a decent list above. But when you're getting down to psychological pricing, to a large extent it's tied up in branding -- both what your customers think your brand is worth, but also what you want them to think you're worth. Maybe you can squeeze an extra couple of bucks out of your customers -- but is that the message you want to send? Maybe. Maybe not. There's more to pricing than the marginal cost/marginal revenue curves you drew up in Microeconomics 101. The prices you set communicate to your customers; they are as much a part of your branding as your logo is -- perhaps more! There are luxury brands, there are bargain brands, there are generic brands, none of which are intrinsically better or worse than the others. So how you brand yourself and how you set your prices depends on your customers, your business and your business goals. Not a satisfying answer, but a true one.
   
   
3. Testing on the WF seems to have a very particular meaning. But I'd argue that testing is a much broader concept than running experiments. Collecting user data, running randomized experiments, doing A/B testing, and all the rest can be very useful. But most of the time I think that just thinking about (a) what you're trying to accomplish (b) what you're doing to accomplish that and (c) how your users are likely to respond to what you're doing will get you 75% - 95% of the way there. So I know you said, "no testing", but I'm still gonna say "test" -- at least in this broader sense.

Sure. If the product was only worth $37 and not $47.

I don't think you are talking about physical products where there is competition based price setting. More of an info report and the question is what can you get for it?

Then it is a matter of need, what the product delivers, credibility, etc.

If it is an "IM" report I am immediately skeptical of anything at $47. Often, its a "price point" arbitrarily grabbed from thin air simply because it is a supposed "price point", and my initial thought is newbie marketer / report may not be credible. Then there is more convincing needed for the sale not because $47 is more than $37, but because $47 was chosen with no price explanation.

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if the initial number is small say 5 dollars, and the price point is 7,50. then its no big deal. the same principal applies for larger numbers, if the original price may be $40 and the price point is $50 then in reality your getting a better deal for the more your paying. The ratio gets better as the price goes up.

Kurt, I'm going to disagree with you and all people who say people round up. My reason: gas prices around here are $2.479, $2.589. Have been for decades. When you ask someone sitting next to a pump with the big $2.479 how much gas is, they say it's $2.47. I'm the only one around here who says $2.48 (that I know of).

A little story. I don't remember what the product was but I didn't think anything about the price when I it was $597. When I saw it at $600, I said, Damn, that's expensive. Same product, different but similar to my mind electronic stores.

I saw $597 around noon; $600 a couple of hours later.

The test, test, test comes from: you (your company, your marketing, your positioning) needs to be tested.

Will R, who has not been around here for a long time, had a post about giving people 3 prices... Which I practice too, with a variation, for a different reason.

Will would do
Bronze is $47, Silver is $67 (but if you act within 3 days it's $57) and Gold would be $87. Because people's value perception would make it easy for him to sell Silver.

I do Bronze is $47, Silver is $77, Gold is $147. My reasoning is, the large distance between bronze and silver makes them think bronze ain't much and Silver's the one with value; the large distance between silver and gold is so big that Silver looks reasonable and they've already established it's got value.

By the way, I've done it Will's way too. The first time I did it was in person, to an insurance guy who thought out loud. It was an amazing show. Yes, he bought the Silver (Bronze 3 pages $297; Silver 5 pages $497 but $357 if he acted fast; Gold 7 pages, $697).

I had shown him someone else's mobile site on my phone, then his. His looked like crap on mobile.

Anyway, pricing depends on what comes before and what you make them think will come after. Dan Kennedy talked a lot about an ad where an S was added:
Play all the music you want
vs
Plays all the music you want.

The 'what comes after' is different from version one to version 2 (just so there's no doubt, version 2 outperformed version one by a large margin).

When you buy, when I buy, when anyone else buys, there's a movie running through out heads, based on a lot of factors. Some of those factors you, the marketer, can influence/replace/repurpose, and end up with the prospect's movie being different. The movie covers the transaction and what the prospect will do after with whatever they will buy.

When I go to the store I buy food from usually, I'm always passing by the bakery, think of buying something, look at things... But the movie running through my head is: my better half's going to be pissed off at me if I bring sweets, she's against sugar (too much of it in the non-bakery things), kids will jump up with joy, they use corn syrup, it's not a special day and I decide: They want $3.97 for that?

However, if there's a special occasion, a birth-day, and I'm shopping for a cake, I don't have a problem paying 10 times more for a piece that's only 3 times larger.

Different people have different price point resistance. For many things, I don't see a difference between, say $15 and $19, for other products $19 is expensive, $15 is cheap. All other things being the same. $127 for a book, no matter who or what's in it, is expensive... I'm not buying. But so is a $37 book, and I'm not buying.

On the other hand, I've bought books at $127 for a book, when I got a free gift worth as little as $0.50. So, a $126.50 book is not expensive? No, it was not the cost of the gift that made the difference; it was the mere presence of an unexpected gift.

I buy cans of Pepsi, individually. Never from Walgreens, they want 0.98 and that's too expensive. The gas station across sells them at $0.87, which is not expensive, and the vending machine in a nearby building has them at $0.75, which is cheap. When Walgreens has a sale and the price is $0.75, I still don't buy from them: too expensive! (Go figure!)

Has to do with expectations.

As a customer, The $10 difference will not stop me from buying the product. The most important thing is the value it would give me in return. I am sure of that, I would pay even $57.

The jump from $37 to $47 isn't a big deal for me. The jump to $77 or $97 is. Otherwise, it's more of a case by case emotional reaction for me. Some offers, for no logical reason I can explain, "just aren't worth it" to me, and all the discounts and exit pops in the world won't get me to buy once I've made my decision. In other words, once I decide I don't see the value in a product, price is pretty much irrelevant.

Good 'reason why' marketing has changed my perception of pricing many times. For both why something is priced higher and lower/discounted.

The Net has probably affected price points to a great degree.

One reason is that with traditional off line sales, a $22 price means a person has to use at least 3 bills, a $20 and two singles. Online, it's just a click, whether the price is $22 or $20.

Another reason is the percentage of people that aren't in the same country as the sale that's being made. If I set a price of $47 in the US, people using different currencies than US dollars won't be affected by the same psychological factors.

The most important aspect that affects my decision making process is this one:

What will the product do for me? And is this something that will help me with my current goals in a significant way?

If the answer is yes, I consider buying it, and if the answer is no, I won't.

If I like the product and it delivers, I am open to buy more products from that person, including ones at higher price points if they are appropriate for my needs.

And if I buy and the product does not live up to my expectations, I am unlikely to buy from that person again.

Well, I have to say the cheaper under $10 price points are new to me, because i come from offline brick & mortar scene where i dumped clients if they ordered for less than $500 more than 1 time.

Online i come from average transaction value per client = $400 but without actually touching either the product or talking with the client [affiliate marketing]

I am just currently getting feedback from my friend on low ticket items, and there the best price points are: $2.99 for quantity and $5.99 for profitability. That's proven stats after 100's of sales.

This $37 vs $47 question i cannot relate to because i never sold anything like that. As a customer that totally depends on if I want the product or not, price is no consideration, I also pay $55 for it if I think its the best in its class. The no-brainer point for me is $27, this makes me easily want to buy it, because then my wife won't talk about it when she sees the bank statement.

Anything ending in a '7' has converted really good for me. Right now I'm testing prices that end in '.95' (for example $9.95) and that's showing promising results.